Happy 50th Birthday, Medicare. Your Patients Are Getting Healthier

A Yale University study analyzed the experience of 60 million Americans covered by traditional Medicare between 1999 and 2013, and found "jaw-dropping improvements in almost every area," the lead author says.

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Originally published on July 30, 2015 8:49 am

Here's a bit of good news for Medicare, the popular government program that's turning 50 this week. Older Americans on Medicare are spending less time in the hospital; they're living longer; and the cost of a typical hospital stay has actually come down over the past 15 years, according to a study in the Journal of the American Medical Association.

Doctors, hospitals and government administrators have put a lot of effort into making Medicare more efficient in the past 15 years. Dr. Harlan Krumholz and colleagues at Yale University took on a study to see whether that effort has paid off.

"The results were rather remarkable," says Krumholz, a cardiologist and leading health care researcher. "We found jaw-dropping improvements in almost every area that we looked at."

The researchers looked at the experience of 60 million older Americans covered by traditional Medicare between 1999 and 2013. They found that mortality rates dropped steadily during that time, and people were much less likely to end up in the hospital.

"If the rates had stayed the same in 2013 as they had been in 1999, we would have seen almost 3.5 million more hospitalizations in 2013," Krumholz says.

"People who were being hospitalized were having much better outcomes after the hospitalization," he says. "They had a much better chance of survival."

And the average cost of a hospital stay dropped too, he says, from $3,290 to $2,801 in inflation-adjusted dollars over the 15-year period for patients in the traditional Medicare program. (Researchers couldn't quantify the experience in Medicare Advantage, the managed-care alternative to Medicare).

Krumholz attributes the improvement to a wide variety of measures designed to boost patients' health, from prevention programs to advances in medical care. He says some of the savings also came about because medical care shifted from hospitals to less expensive outpatient clinics.

"They're pointing out a very good thing in the medical system," says economist Craig Garthwaite at the Kellogg School of Management at Northwestern University. He says the recession, which helped slow rising health care costs overall, apparently played a minor role in this story of Medicare.

Costs really are being contained, Garthwaite says. One other reason that's happening is that the federal government is reimbursing hospitals and doctors less for treating Medicare patients.

"That's an easy way to get control of medical spending in Medicare," Garthwaite says, but "it's just not something we can do in the private market, and we have to worry about how sustainable it is for the Medicare program overall."

With the post-World War II baby boom now reaching retirement age, more and more people are turning 65 and becoming eligible for Medicare. That growth continues to drive up the overall cost of the program, even as that average cost per illness or hospitalization comes down. And as older Americans live longer lives, they use Medicare for more years than previous generations did.

Medicare is still running a bit of a deficit, but the situation is improving. The program's trustees say its trust fund will be solvent through 2030. Some adjustments would be needed to keep the program in good financial health beyond that date.

Garthwaite says other recent trends could make matters worse, with one especially worrisome example being sharply rising drug prices.

"Some of these [new cancer] products are providing only a few months of life for several hundred thousand dollars," he says. And the system doesn't do a good job of making difficult judgments in situations like that.

Joseph Antos, an economist in health policy at the American Enterprise Institute, agrees that the good news from the Yale study doesn't assure a rosy future. He's concerned about the financial health of Medicare if, for example, an effective drug for Alzheimer's disease is developed.

"I would argue that if anybody came up with an effective treatment for Alzheimer's today, that treatment would be hailed as a major breakthrough and we wouldn't be looking at the cost," Antos says.

And that would almost certainly break the pattern that's been documented over the past 15 years, where improving health has actually helped drive down the cost of medical care.

Copyright 2015 NPR. To see more, visit http://www.npr.org/.

Transcript

MELISSA BLOCK, HOST:

Medicare is turning 50 years old, and it's getting better with age. Older Americans on Medicare are spending less time in the hospital. They're living longer. And the cost of a typical hospital stay has actually been coming down. NPR's Richard Harris reports.

RICHARD HARRIS, BYLINE: Doctors, hospitals and government administrators have put a lot of effort into making Medicare more efficient over the past 15 years. Dr. Harlan Krumholz and colleagues at Yale University took on a study to see whether that effort has paid off.

HARLAN KRUMHOLZ: The results were rather remarkable. We found jaw-dropping improvements in almost every area that we looked at.

HARRIS: Mortality rates dropped steadily for this population of about 60 million older Americans. And people were less likely to end up in the hospital.

KRUMHOLZ: People who were being hospitalized were having much better outcomes after the hospitalization, had a much better chance of survival. And the cost per inpatient Medicare beneficiary was also dropping over this period.

HARRIS: Yes, hospital costs per person have actually declined when adjusted for inflation in contrast to overall health care costs. And the impact documented in the latest Journal of the American Medical Association isn't trivial.

KRUMHOLZ: If the rates had stayed the same in 2013 as if they had been in 1999, we would have seen almost 3.5 million more hospitalizations in 2013.

HARRIS: Krumholz attributes this to a wide variety of measures designed to improve people's health, from prevention programs to advances in medical care. He says some of the savings also came about because care shifted from hospitals to less expensive outpatient clinics. And while this is good news for the financial health of Medicare, it doesn't mean that the program will sustain itself indefinitely.

KRUMHOLZ: Medicare costs continue to rise in part because more people are entering Medicare and in part because as we help people survive longer, they're being covered by Medicare for a longer period of time.

HARRIS: The baby boom is coming of age, and that will bring a flood of new patients into Medicare. Economist Craig Garthwaite at the Kellogg School of Management says the recession, which helped slow rising health care costs overall, apparently played a minor role in this story of Medicare.

CRAIG GARTHWAITE: They're pointing out a very good thing in the medical system.

HARRIS: Costs are really being contained, he says. One other reason is that the federal government is reimbursing hospitals and doctors less for treating Medicare patients.

GARTHWAITE: That's an easy way to get control of medical spending within Medicare, obviously, 'cause we can do that. It's just not something we can do in the private market. And we have to worry about how sustainable it is for the Medicare program overall.

HARRIS: Medicare is still running a bit of a deficit, but the situation is improving. The program's trustees say its trust fund will be OK through 2030 and beyond that if the program is tweaked a bit. Garthwaite says other recent trends could make matters worse, though - for example, sharply rising drug prices.

GARTHWAITE: We can look at the rise in new specialty medications is one place where we see drugs that are very expensive and that might not provide the full benefit for their cost. Some of these oncology products are providing only several months of life for several hundred-thousand dollars.

HARRIS: Joe Antos at the American Enterprise Institute agrees that the good news from the Yale study doesn't assure us a rosy future. He's concerned about the financial health of Medicare if, for example, someone develops an effective drug for Alzheimer's.

JOE ANTOS: I would argue that if anybody came up with an effective treatment for Alzheimer's disease today, that treatment would be immediately hailed as a major breakthrough, and we wouldn't be looking at the cost.

HARRIS: And that would almost certainly break the pattern that's been documented over the past 15 years where improving health has actually helped drive down the cost of medical care. Richard Harris, NPR News. Transcript provided by NPR, Copyright NPR.